New guidance to be introduced this spring will create a “local residence test” to give local people priority in the waiting list for social housing and ensure that migrants become eligible only after they have been in the country for two years.

Yesterday, Colchester Borough Council’s (CBC) housing chief Tina Bourne criticised the policy, saying it would “pit vulnerable groups against each other” while bosses at Tendring District Council (TDC) welcomed the move.

TDC already has a residency clause included in their housing policy which prevents those who have not lived in the district for three years from being considered for a council house.

Leader of TDC Peter Halliday said: “It’s nice to see the Government following our lead. We already have a three year residency clause in our housing policy.

“We have a strong view that local homes should be for local people. There are a lot of young people living here who have lived here all their lives and we have a shortage of housing stock to meet their needs, and their needs come first.”

He said the residency clause, which was introduced last January, was there to minimise benefit migrants.

Around 10% of council properties have also been set aside for people in work over those who are unemployed in a move to reward those who “pay their taxes”.

In Colchester, someone has to prove a connection with the area to be eligible for council housing but, unlike in Tendring, there is no time limit.

CBC’s portfolio holder for housing Tina Bourne said: “As it stands - someone has to prove they have a connection with the local area to qualify for social housing – unless they are homeless in which case we have a duty to house them under the Homeless Act. This is the case for all local authorities.

“But I don’t think we should put a time limit on that connection as Mr Cameron is suggesting.”

She said the local authority had signed up to the Gateway Home Choice scheme which allows people to bid for social housing across eight districts or boroughs - Babergh, Braintree, Colchester, Ipswich, Maldon, Mid Suffolk, Suffolk Coastal and Waveney.

Ms Bourne added: “We have as many people moving out of Colchester as moving into the town - so that is why we signed up to the sub-regional partnership. Most people move within the region.

“There is a perception that lots of people are coming up from London and taking homes but that isn’t the case.

“We didn’t feel the need to put a time limit on how long someone has been associated with the borough. That’s not the Britain I want to live in.

“If someone has moved here and they have a job and are contributing to the economy and then they find they need social housing then we think they should qualify. Their children might be in local schools and they need to stay in the area.

“If there is not enough housing available then there are other ways of dealing with the situation. This is using a sledgehammer to crack a walnut. This (the introduction of time limits) just pits one vulnerable group of people against another.”